Home Insurance Coverage for Townhomes (2024)

If you own a townhouse, mortgage lenders often require you to carry insurance. The type of townhome insurance you need may depend on your homeowners association.

Sarah Sharkey
Written bySarah Sharkey
Sarah Sharkey
Sarah SharkeyInsurance Writer
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  • Contributor to top media, including USA Today

A passionate personal finance advocate, Sarah’s writing has graced the pages of many of the personal finance and insurance industries’ top web publications.

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Katie Powers
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Katie PowersAuto and Life Insurance Editor
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  • 3+ years experience in insurance and personal finance editing

Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.

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Updated May 10, 2024

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Homeowners and renters don’t legally need to carry townhome insurance. Although you don’t have a legal obligation to carry homeowners insurance, your mortgage lender, homeowners or condo association, or landlord could require you to carry homeowners or renters insurance.[1]

Here’s what you need to know about townhouse insurance.

Quick Facts
  • The type of insurance you need for your townhome varies based on your mortgage lender, landlord, or homeowners association.

  • If your townhouse is part of a homeowners or condo association, you’ll likely need to buy homeowners or condo insurance — even if you own your townhouse outright.

  • Standard homeowners insurance policies include coverage for the structure of your home, personal belongings, liability, and additional living expenses.

What does townhouse insurance cover?

When it comes to insurance for your townhouse, the type of policy you purchase will dictate what’s covered. For example, coverage needs look different for owners and renters.

Standard homeowners policies include the following coverages:

  • illustration card https://a.storyblok.com/f/162273/150x150/41b171a645/types-of-houses-96x96-orange_026-mansion.svg

    Coverage for the home’s structure

    If a covered event damages your townhome, like a hailstorm or other natural disaster, dwelling coverage will help you pay for repairs. Notably, this protection doesn’t cover floods or earthquakes.

  • illustration card https://a.storyblok.com/f/162273/100x100/32ed42213e/personal-property.svg

    Coverage for personal property

    Personal property coverage can help you buy replacements for items damaged during a covered event or stolen items. For example, if a fire destroys your closet, your insurer may help you pay for new clothes. But this doesn’t cover exceptionally expensive items, like jewelry.

  • illustration card https://a.storyblok.com/f/162273/x/001e1e2a4c/legal-protection.svg

    Liability coverage

    If someone sues you for property damage or bodily injuries, liability coverage can help pay for your legal defense.

  • illustration card https://a.storyblok.com/f/162273/100x100/e5213a7025/loss-of-use.svg

    Additional living expenses

    Also known as loss of use coverage, additional living expenses coverage helps you pay for a comparable living situation if your house incurs damage that makes it temporarily unlivable.[2]

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If you’re the owner of your townhouse

If you own your townhouse, you’ll need a standard home insurance policy. While this isn’t a legal requirement, mortgage lenders often require borrowers to carry this coverage. Even if you’ve paid off your townhouse, you can still choose to protect this important asset with a townhouse insurance policy.

A standard homeowners insurance policy will include coverage for the structure of your home, personal belongings, liability coverage, and additional living expenses. This is the same type of coverage available for single-family homes.

If your townhouse property is part of a homeowners association

If your townhouse is part of a homeowners, condo, or townhouse association, your HOA will have a master insurance policy that covers shared spaces. But you’ll likely still need to get your own insurance to cover what the master policy doesn’t.

Your personal condo or homeowners insurance policy should include coverage for structures not covered in the master policy, your personal possessions, liability coverage, and additional living expenses.

Before getting condo insurance, find out what your HOA’s insurance policy covers. The coverage included in the overarching policy will influence what coverage you need.[3]

If you rent a townhouse

If you rent a townhouse, your landlord might require you to buy a renters insurance policy. You can also choose to purchase this type of policy to protect yourself, even if your landlord doesn’t require it.

A standard renters insurance policy should include coverage for personal possessions, liability, and additional living expenses. You don’t need coverage for the home’s structure.[4]

How much townhouse insurance do you need?

The amount of townhouse insurance you need depends on your unique situation. Use the tips below to determine the levels of coverage you need.

  • Dwelling: Ideally, you should have enough coverage to rebuild your house if a covered event completely destroys it. The price to rebuild your home will depend on the house’s location, features, and size. If you need help determining this overall number, consider asking an insurance agent.

  • Personal property: Most insurers offer to cover 50% to 70% of the replacement cost of damaged or stolen items. You can decide how much coverage you need by doing a home inventory, which involves estimating how much your items cost.

  • Liability: Liability insurance limits typically start around $100,000, but experts recommend that homeowners purchase between $300,000 and $500,000 in coverage. Some reasons to increase your coverage include owning a dog, regularly hosting parties at your house, and having significant assets that someone could target in a lawsuit.

  • Additional living expenses (ALE): Limits vary by company, but it’s common for ALE coverage to equal about 20% of your home’s insurance.[5]

Read More: How Much Homeowners Insurance Do You Need?

Read More: How Much Homeowners Insurance Do You Need?

Condo vs. townhouse: What’s the difference?

A townhouse is a building structure that shares one or two walls with neighboring units, while condos are typically units within a larger building. Unlike condos, which have common areas for all complex residents, townhouses have land, which can include driveways, front and backyards, and detached or attached garages.

When you own a condo, you only need condo insurance for the interior of the unit. In contrast, if you own a townhome, you’re responsible for obtaining home coverage for the interior, exterior, and land beneath it.

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How much home insurance costs

On average, townhome owners with $200,000 in dwelling coverage pay $1,604 per year for a homeowners insurance policy. But the exact cost you pay varies based on the location and details of your coverage.

The table below highlights the average cost of townhome insurance by insurance company.

Insurance CompanyAverage Annual Premium
Grange$770
Westfield$872
Hastings Mutual$888
Erie$906
Unitrin$1,022
Amica Mutual$1,035
AIG$1,093
American Family$1,176
American National P&C$1,149
Cincinnati Insurance$1,197
West Bend Mutual$1,191
Mercury$1,244
ASI$1,275
Armed Forces Ins Exchange$1,291
Allstate$1,352
Auto Club Group$1,389
State Farm$1,407
USAA$1,415
Nationwide$1,437
Travelers$1,479
Foremost$1,490
Auto-Owners$1,518
Chubb$1,596
Grange Mutual$1,634
National General$1,646
Farmers$1,680
Pure Companies Grp$1,742
Allied$1,753
Universal Insurance Company of North America$1,844
CSAA$1,895
Encompass$1,997
Bankers Insurance Group$2,101
Country$2,182
Hanover$2,603
Metropolitan$2,672
Acuity$3,511
Shelter$3,632
Disclaimer: Table data sourced from real-time quotes from Insurify's 50-plus partner insurance providers. Actual quotes may vary based on the policy buyer's unique driver profile.

How insurers calculate the cost of townhouse insurance

Every insurance company has a slightly different method of determining rates. Here are some factors that commonly affect home insurance premiums.

  • Location: The location of your townhouse can make all the difference. A neighborhood with low crime rates and limited bad weather might lead to cheaper rates.

  • House features: The cost to rebuild your home increases if it has special features, which can increase your insurance premiums.

  • Deductible: Opting for a higher deductible can lower your homeowners insurance costs. Make sure you can pay the deductible from your savings if you need to file a claim.

  • Discounts: Many insurers offer a suite of discounts. For example, if you purchase other insurance products through the same company, you could score a bundling discount. Don’t be afraid to ask about discount opportunities.

  • Credit history: In general, insurers offer lower rates to homeowners with a good credit history.[6]

Townhome insurance FAQs

It’s important to secure the right amount of coverage for your home insurance needs. The following information should help answer your remaining questions about townhome insurance.

  • What is the difference between an HO-3 and HO-6 policy?

    An HO-3 policy is a standard homeowners insurance policy, which includes coverage for the structure of your home, personal belongings, liability, and additional living expenses. An HO-6 policy is for condo owners. It doesn’t cover the structure of your home, but it does cover your personal property, liability, and additional living expenses.

  • What is an HO-6 insurance policy?

    An HO-6 insurance policy is specifically for owners of condominiums and co-op units. This policy covers the unit’s interior, your own belongings, and your liability.

  • What is HOA insurance?

    HOA insurance covers the shared spaces provided for members of a homeowners association. While it protects the community from property damage and bodily injury claims in common areas, it doesn’t provide coverage for the interior of your unit.

  • Which company has the cheapest home insurance?

    Westfield, Grange, Erie, and Hastings Mutual offer some of the cheapest homeowners insurance for townhouse owners.

Sources

  1. Progressive. "What type of insurance is needed to protect your townhome?."
  2. Insurance Information Institute. "Homeowners Insurance Basics."
  3. Insurance Information Institute. "Insuring a co-op or condo."
  4. Insurance Information Institute. "Renters Insurance."
  5. Insurance Information Institute. "How much homeowners insurance do I need?."
  6. Insurance Information Institute. "12 Ways to Lower Your Homeowners Insurance Costs."
Sarah Sharkey
Sarah SharkeyInsurance Writer

Sarah Sharkey is a personal finance writer who enjoys helping people make savvy financial decisions. She covered insurance and personal finance topics. You can find her work on Business Insider, Money Under 30, Rocket Mortgage, Bankrate, and more. Connect with her on LinkedIn.

Katie Powers
Edited byKatie PowersAuto and Life Insurance Editor
Photo of an Insurify author
Katie PowersAuto and Life Insurance Editor
  • Licensed auto and home insurance agent

  • 3+ years experience in insurance and personal finance editing

Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.

Featured in

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